FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE [Hon. Nancy Torresen, U.S. District Judge]
Jonathan M. Dunitz, with whom Taylor R. Neff and Verrill Dana
LLP were on brief, for appellants.
E. Olafsen, with whom Olafsen & Butterfield LLC was on
brief, for appellee.
Torruella, Lynch, and Lipez, Circuit Judges.
TORRUELLA, CIRCUIT JUDGE.
Berry Plastics Corporation and Covalence Specialty Coatings,
LLC (collectively, "Berry") appeal from a
jury's award of $7.2 million in damages to
Plaintiff-Appellee Packgen resulting from the failure of
material Berry had supplied to Packgen. Berry contends that
the district court erred by (1) denying Berry's motion to
exclude Packgen's damages expert, (2) allowing Packgen
employees to testify concerning potential Packgen
customers' intent to purchase Packgen's new product,
and (3) failing to correct these errors by denying
Berry's motion for judgment as a matter of law, a new
trial, or to alter or amend the judgment. We affirm.
manufactures a polypropylene intermediate bulk container used
to transport and store catalyst, a hazardous and volatile
chemical agent used to refine crude oil. No other company
manufactures similar polypropylene containers, but refineries
also lease metal flow bins to transport and store catalyst.
In the mid-2000s, Packgen redesigned its bulk containers. It
made the redesigned container, called the Cougar, out of a
laminated fabric. Berry supplied the laminated fabric and
represented that it could meet Packgen's quality
of the redesign, Packgen worked with CRI/Criterion
("CRI"), a catalyst manufacturer and its largest
customer at the time, to modify the new Cougar to meet
CRI's specialized requirements. After a lengthy process,
CRI began purchasing Cougars in October of 2007. From October
2007 to March 2008, CRI purchased 7, 567 Cougars for nearly
$1.5 million, and it placed an order for 1, 359 Cougars to be
delivered in April 2008.
also began marketing the Cougar to North American refineries
in 2007, focusing on thirty-seven refineries where CRI
supplied catalyst containers. Those refineries were likely
customers because they would experience the Cougars CRI used,
and they were all long distances from their catalyst
suppliers, so they would save significant transport costs
using the lighter, more compact Cougar rather than flow bins.
Packgen's sales manager testified that decision-makers at
all thirty-seven refineries had told her "that they were
going to be purchasing the [C]ougars on their next turnaround
cycle." Decision-makers at ten of the refineries had
also told Packgen's president that they "were
willing to purchase and try [Packgen's] containers."
April 4, 2008, one of the Cougars CRI had purchased split
open while being moved. Over the next weeks, Packgen learned
that other Cougars had also failed, in some cases causing the
catalyst inside to combust, and it began to investigate.
Packgen determined that the Cougar had failed because some of
the laminated fabric supplied by Berry was faulty, and that
it had sold CRI approximately two thousand Cougars made from
the faulty laminated fabric. Following the incident, CRI
cancelled its order of 1, 359 Cougars for the month of April,
and it never ordered another Cougar. In addition, the
thirty-seven refineries did not order Cougars as Packgen had
filed suit against Berry in Maine Superior Court, alleging
breach of contract, breach of implied and express warranties,
and negligence. Berry removed the case to the United States
District Court for the District of Maine.
designated Mark G. Filler, a certified public accountant and
certified valuation analyst, as an expert witness on damages.
Berry moved to exclude Filler's opinions and testimony
under Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579 (1993), and the district court held a two-day
Daubert hearing. On September 12, 2014, the district
court issued a forty-seven-page order denying Berry's
motion to exclude. It concluded that a variety of facts
supported Filler's ten-year projections of Packgen's
lost profits from CRI and the thirty-seven refineries, his
assumption that Packgen had a one-in-ten chance each year of
selling Cougars to each of the thirty-seven refineries, and
his assumption that the refineries did not buy Cougars only
because of the product failure, and it determined that Filler
did not improperly combine forecasting methodologies from
both business valuation and lost profits models.
to trial, Berry filed a motion in limine seeking to exclude
testimony by Packgen employees concerning CRI's and the
thirty-seven refineries' intent to purchase Cougars and
why they decided not to make those purchases. The district
court reserved ruling on the motion for trial. At trial, the
district court ruled that Packgen's president could
"testify as to what a decision-maker at CRI told him
about what CRI's intent [to purchase Cougars] was"
but not "why [CRI was] ceasing business." The
district court applied its ruling to subsequent testimony,
allowing Packgen's president and sales manager to testify
that decision-makers at the thirty-seven refineries had
expressed their intent to purchase Cougars but not about why
those thirty-seven refineries subsequently did not make
trial, on November 12, 2015, the jury returned a verdict
against Berry and awarded $7, 206, 646.30 in damages to
Packgen. On January 29, 2016, the district court denied
Berry's motion for judgment as a matter of law, for a new
trial, or to alter or amend the judgment. The district
court entered judgment against Berry on March 8, 2016, and
Berry timely appealed.
argues on appeal that the district court abused its
discretion by admitting Filler's testimony regarding
Packgen's lost profits from the refineries because (1) he
did not establish that the Cougar failures caused Packgen any
lost profits from the refineries, (2) no facts supported his
ten-year loss period, and (3) no facts supported his
one-to-ten odds of selling Cougars to the refineries. Berry
further argues that the district court abused its discretion
by admitting Filler's testimony regarding damages
attributable to lost business from CRI because (1) no facts
supported his assumption that CRI would purchase 1, 261 units
per month, (2) no facts supported his ten-year loss period,
and (3) his analysis improperly combined lost-profit and
business-valuation methodologies. In addition, Berry asserts
that the district court erred by allowing Packgen's
employees to testify about CRI's and the refineries'
stated intent to purchase Cougars, because their testimony
relied on hearsay, and that it erred by denying Berry's
motion for judgment as a matter of law, for a new trial, or
to alter or amend the judgment. We address these arguments in
District Court Did Not Abuse Its Discretion by Admitting
district court must "ensur[e] that an expert's
testimony both rests on a reliable foundation and is relevant
to the task at hand." Daubert, 509 U.S. at 597.
To determine whether testimony is sufficiently reliable --
Berry does not challenge the testimony's relevance -- a
district court must determine whether it is "based on
sufficient facts or data, " was "the product of
reliable principles and methods, " and whether the
expert "reliably applied the principles and methods to
the facts of the case." Fed.R.Evid. 702. "Exactly
what is involved in 'reliability' . . . must be tied
to the facts of a particular case." Milward v.
Acuity Specialty Prods. Grp., Inc., 639 F.3d 11, 14-15
(1st Cir. 2011) (quoting Beaudette v. Louisville Ladder,
Inc., 462 F.3d 22, 25-26 (1st Cir. 2006)). "So long
as an expert's scientific testimony rests upon good
grounds, based on what is known, it should be tested by the